How are your bitcoins taxed?

If you want to know whether the capital gains you make on bitcoin investments is taxable at all in Belgium, you can ask the Ruling Committee for an advance ruling.

The Ruling Committee recently published a detailed questionnaire (NL/FR) that you will have complete when applying for a ruling.

If you intend to ask for a ruling on the taxation of your transactions with bitcoin, this is the questionnaire the Ruling Committee has put together. To help you understand the reasoning behind the questionnaire, we have coded the questions.

  • Text in italics means that these transactions are indicative of a bona fide non-profit seeking operation: e.g. you inherited bitcoins and you are just holding them. Probably tax exempt.
  • Text in bold are situations that are mostly indicative of a speculative intention so that the capital gains may be liable to capital gains tax. Probably taxable at 33%
  • Text in bold and italics may go both ways: if you have less of this, the capital gains are probably tax exempt. If you have more, they are probably taxable at 33%.
  • However, if you are more actively involved with bitcoins. Probably taxable at the progressive rates like earnings.
  • In some situations, what may be indicative of a trading activity, may be a hobby that got a bit out of hand.

First of all, if you have been selling or converting cryptocurrencies in 2016 or before, forget it: you cannot get an advance ruling:

  1. Have you made any sales of cryptocurrencies or conversions from one cryptocurrency to another in 2016 or in previous years? If this is the case, the Ruling Committee is of the opinion that the application is no longer prior and therefore no advance ruling can be issued.
  2. If no sales or conversions from one cryptocurrency to another have taken place in 2016 or in previous years, please answer the following questionnaire as accurately as possible, so that the Ruling Committee can make an informed assessment of the applicable tax regime (exempt private income, miscellaneous income or professional income?) of the capital gain(s) realised on the sale of your cryptocurrencies.

The Cryptocurrencies Questionnaire

  1. How did you acquire cryptocurrencies (e.g. through inheritance, donation, personal investment, reinvestment of movable or immovable property sold, etc.)?
  2. For how many years have you been investing in cryptocurrencies?
  3. What is the (total) amount you have already invested in cryptocurrencies?
  4. What is the frequency of buying and selling transactions in cryptocurrencies, i.e. how many times a year do you carry out transactions (once, daily, weekly, monthly, a few times a year, etc.)? Please provide details of all transactions made from the start until today (purchases, sales, conversions from one cryptocurrency to another, etc.), with an indication of dates and amounts.
  5. How long have the cryptocurrencies you wish to sell been in your possession?
  6. What is your investment strategy with regard to the cryptocurrencies?
    – buy & hold, holding virtual currencies for a long period of time,
    trending, trading based on a technical analysis of market prices or trends,
    active trading / daytrading,
    – scalping, making small profits by keeping the positions open for a very short time,
    – arbitrage, buying and selling on different exchanges in order to take advantage of the price differences on these exchanges
    ).
  7. Are you engaged in mining through your own mining rig or a mining pool? If so, please give details.
  8. Do you buy or sell cryptocurrencies via an automated process or via automatic software? Have you designed this process yourself? Please explain.
  9. What is your current professional activity? What studies have you done? Have you gained knowledge about the trade in cryptocurrencies in your professional activity?
  10. Have you invested in a cryptocurrency saving fund? Please explain.
  11. Are you active on forums, via blogs in the cryptocurrency community? Do you give lectures about this? Please explain.
  12. What percentage of your total (movable) assets have you invested in cryptocurrencies? You can also invest in other movable property (e.g. shares, bonds, paintings, gold, real estate, etc.). If so, please specify in which movables you have invested and the ratio of your investment in cryptocurrencies to those other investments?
  13. Do you use special equipment (e.g. a hardware wallet) to protect your cryptocurrencies? If so, please explain.
  14. Do you also invest in cryptocurrencies for other people? If so, for whom and how much?
  15. Have you used loans to finance your purchases of cryptocurrencies? If so, what was the amount and from whom?
  16. What is the current (market) value of your cryptocurrencies portfolio (including date)?
  17. Do you rely on the advice of financial and/or IT professionals for your investments in cryptocurrencies?

Author: Marc Quaghebeur

Marc Quaghebeur is a Belgian tax lawyer with Cabinet DAVID specialising in international tax issues and cross border estate planning. He is a member of the Brussels Bar and the Society of Trust and Estate Practitioners. He

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